Bangladesh expects a bigger inflow of foreign direct investment in the days to come as different nations plan to relocate their factories to countries like Bangladesh to bring down cost amid a cash crunch caused by the pandemic, said Commerce Minister Tipu Munshi yesterday.
In 2019, the country saw net inflows of foreign direct investment amounting to $2.88 billion, down about 20 per cent from a year earlier, according to data from the Bangladesh Bank.
"We should remain prepared to grab the opportunity as Japan, China, Vietnam, India and Indonesia have already started moving their production lines elsewhere," Munshi said at his ministry's regular consultative meeting on investment at the secretariat in Dhaka.
Factory relocation will be even faster in the post-pandemic period, Munshi told the meeting, which was attended both in person and virtually by other ministers, lawmakers, trade body leaders and government high-ups.
China's comparative advantage in manufacturing relatively simple, low-value products like clothing and plastic goods to more advanced and lucrative pursuits like smartphones, computers and auto parts is peerless, meaning it has gone on to become the world's largest manufacturer, accounting for roughly one-sixth of global economic output.
Now, thanks to the bad diplomatic blood arising out of the outbreak of coronavirus from one of its cities many nations are seriously mulling over cutting down their reliance on China for their material needs.
And Bangladesh could grab this opportunity, just like India and Vietnam are raring to.
The Japanese embassy in Dhaka last week sent him a list of factories that want to relocate from China to Bangladesh, said Foreign Minister AK Abdul Momen.
Foreign investors often express their dissatisfaction over bureaucratic tangles that stand in the way of business operations and obtaining various licences.
"They particularly complain about the poor services at the Bangladesh Bank, the commerce ministry and the National Board of Revenue," Momen added.
The government should soon communicate with the foreign companies that want to move their factories to Bangladesh, said Salman F Rahman, private sector industry and investment adviser to the prime minister, while calling for forming a taskforce to that end.
"We should assess our competitors and offer the best investment regime to the companies interested in Bangladesh," said Sheikh Fazle Fahim, president of the Federation of Bangladesh Chambers of Commerce and Industry.
Fahim suggested offering policy and tariff support such as corporate tax incentive, tax holidays, policy consistency, and efficient and professional trade facilitation.
Job cuts and the post-pandemic losses would be offset by the new investments as fresh job opportunities will be created in the small and medium enterprises and import-substitute industries, he said.
"We have reached out to bilateral and multilateral trade organisations urging them to give Bangladesh the highest priority in the post-COVID-19 investment relocation strategies as we enjoy competitive advantages on many fronts," Fahim said.
The government should set short-, mid- and long-term goals to attract more investment, said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association.
"We have to move beyond apparel, adopt new technologies and look for regional collaborative investment."
She went on to urge the government to launch aggressive roadshows in strategically important places to bring in more FDI.
"We need tailor-made researches and powerful content to convince the investors."
In the post-pandemic era, large investment and sizeable export would be required, she said, adding that cheap labour is unlikely to remain as a useful tool in future.
"Hence, skills and technology upgradation are necessary," she added.